Wells Fargo & Co Chief Executive Officer John Stumpf will forfeit unvested equity awards worth about $41 million and will not get a salary while the company’s board investigates the bank’s sales practices.
Carrie Tolstedt, the former head of the retail division at the center of a burgeoning sales scandal, has left the company ahead of her planned Dec. 31 retirement date, will get no severance and has forfeited unvested equity awards worth about $19 million, the bank said. Stumpf and Tolstedt will also not receive bonuses for 2016.
The penalties represent one of the biggest financial sanctions ever levied against a major bank boss and mark a sharp change from a few years ago when despite scandals at large banks, no CEO had to give back a bonus. Wells Fargo, the United States’ third-largest bank by assets, is under pressure to show it is holding its top brass accountable after government investigations revealed that some of its employees opened as many as 2 million accounts without customers’ knowledge in order to meet sales targets.
The company’s failure to claw back executive bonuses was a big feature of Stumpf’s appearance before a Senate Bank Committee meeting last week into the bank’s sales tactics. Some lawmakers also called on him to resign. Stumpf will appear before the House Financial Services Committee on Thursday.
The San Francisco-based bank agreed to pay $190 million earlier this month to settle regulatory charges over the account scandal and has fired about 5,300 employees, most of them low-ranking staff, in connection with it.A special committee of the bank’s independent directors will lead an investigation into the retail bank’s sales practices, helped by the board’s human resources committee and the law firm Shearman & Sterling LLP, according to the statement.